Higher GDP for lower unemployment

Unemployment fell to 7.3 per cent in the second quarter (Q2) of 2021, down from 7.4 per cent in Q1 2021, according to the state-run Central Agency for Public Mobilisation and Statistics (CAPMAS). The decline has been a result of increasing public investments and megaprojects carried out since the Covid-19 pandemic hit the world in March 2020.

Analysing the CAPMAS data, trade and water supply and drainage sectors slashed the jobless rate by adding a total of 275,000 jobs in Q2 2021. The data reveals a new employability trend. Earlier, construction was the main job provider thanks to megaprojects over the past seven years.

The nation’s manpower stood at 29.1 million in Q2, compared to 29.3 million in Q1, CAPMAS data showed. The number of the unemployed fell to 2.1 million, down from 2.2 million in Q1, according to CAPMAS.

The wholesale and retail trade added 206,000 jobs in Q2 2021, while jobs at the water supply and drainage networks rose by 65,000, CAPMAS data showed.

However, the construction and agricultural sectors shed 88,000 and 82,000 jobs on the April-June period, respectively, according to CAPMAS. Similarly, education lost 60,000 jobs in Q2 2021.

Falling unemployment rate indicates improved economic growth, economists say, citing higher investment rates.The government targets GDP growth of 5.4 percent in the fiscal year 2021-2022, up from 2.8 per cent in fiscal year 2020-2021, according to data from the Planning and Economic Development Ministry.

The government also seeks to increase the per capita GDP, the economic output per person, to 3.4 per cent in the year 2021/22.The per capita GDP metric measures the economic prosperity among individuals. Slashing unemployment and poverty are key factors to increase per capita GDP.

Higher GDP growth and a fair distribution of public investment across the country would probably decrease unemployment below seven per cent by the end of the year.

In the long run, the government is to think out of the box in addressing unemployment. The culture of private business should be part of the education system to increase employability.

To effectively combat unemployment, the government along with the civil society should bolster an entrepreneurial culture and replace a deep-rooted concept of public employment with a free enterprise mindset, especially among young people.